How Small Depository Institutions Are Strengthening Their Communities with Money Smart

Since the FDIC released the Money Smart financial education curriculum a little over 10 years ago, we have considered it to be a way for financial institutions to strengthen their communities. Here are reports from three financial institutions that are using Money Smart as an outreach tool and to help consumers learn the virtues of appropriately using mainstream banking services.

Merchants Bank, based in Burlington, Vermont, has used Money Smart throughout the state since the FDIC curriculum was first introduced in 2001. At that time, Doreen Allen, currently the bank’s Community Reinvestment Act Officer and Community Banking Manager, saw Money Smart as an effective tool to help customers who struggled with overdrawn checking accounts, which for many was because they did not know how to manage their money.

“It became clear that there was a real need for financial literacy in Vermont” and that “there also were benefits for us” from the business side, Ms. Allen said. She shared Money Smart with her fellow managers at Merchants Bank, and they began to use it. “The bank’s staff became even more involved in our communities,” she said. “We broke down some barriers, making banks and bankers seem less scary.” Today, she noted, the bank conducts Money Smart presentations “at schools, senior centers, homebuyer workshops, a transitional housing center, a correctional center, Girl-Scout Troop meetings, and anywhere else we can.”

Ms. Allen listed the key reasons Merchants Bank is successful with its Money Smart program. “Flexibility, because we are willing to present all modules or only one to any group, and at their location or ours,” she said. “We also have strong support from senior management for Money Smart. We even require all personal bankers to present Money Smart annually. Thus, we have a culture that encourages involvement in the community. And using Money Smart is easy. We love it.”

ParkeBank in Sewell, New Jersey, is another community bank that understands the business case for financial education. In the southern part of the state, ParkeBank works closely with Washington Township High School. Daniel Sulpizio, Senior Vice President and Director of Retail Banking, who leads the bank’s financial education efforts. uses Money Smart to teach students life skills, such as how to identify and use a financial institution that meets their needs now and after they graduate. Mr. Sulpizio emphasized that he doesn’t use the Money Smart program as a sales tool to open accounts. He did, however, note that most students choose to open accounts, often to start “saving for cars.”

Mr. Sulpizio also serves as board member of the Gloucester County Habitat for Humanity, which offers the Money Smart program in monthly, two-hour sessions to help new homeowners succeed in managing a home and a budget. “ParkeBank managers and staff serve on various boards and organizations and become rooted in the communities we serve,” he added. “It is who we are.”

Finally, HarborOne Credit Union in Brockton, Massachusetts, also uses Money Smart as part of its strategy to promote financial inclusion. HarborOne’s programs include its MultiCultural Banking Center, which opened in downtown Brockton in 2007 to provide education and other resources primarily to the unbanked and underbanked. Money Smart is taught at the Center in English, Portuguese, French and Spanish.

“The primary goal of the participants is to learn how to better manage their income and save for a down payment on their first homes,” said Leo MacNeil, Senior Vice President of Community Relations for HarborOne. “Another is to access credit at mainstream financial institutions. Additionally, many attend to learn about credit, such as how to establish a credit history and improve their credit score.”

Almost all Money Smart graduates of the MultiCultural Banking Center program are allowed to open a checking account -- even if they had an account closed in the past because of repeated overdrafts -- and are approved for a $500 line of credit. After one year, the line of credit is reviewed and, if it is managed well, the limit is increased to $1,000. “The majority of Money Smart graduates do manage their accounts well,” explained Mr. MacNeil.

“As these stories illustrate, the options for financial institutions to use the Money Smart curriculum can range from working with adults to teaching youths,” commented Luke W. Reynolds, Chief of the FDIC's Outreach and Program Development Section, which includes the Money Smart program, “But one thing is consistent: Bankers can leverage their expertise to help Money Smart participants find appropriate financial services to meet their everyday transactional needs and build a solid financial future.”